As the UK government prepares for significant tax changes in 2025, Rachel Reeves, Chancellor of the Exchequer, has set her sights on refining the Temporary Repatriation Facility (TRF).  

Reeves announced at the World Economic Forum in Davos that she would “tweak” the transition period, increasing the generosity of the TRF making this more attractive to non-UK domiciled (non-doms).  

Announcing her decision to tweak the transition period, Reeves said: “We have been listening to the concerns that have been raised by the non-dom community.” 

The government still expects the package of measures to raise £12.7 billion over the next five years. 

A recap on the changes announced at the Autumn Budget

Originally announced as part of the Conservative’s Spring Budget 2024, and adjusted in the Autumn Budget 2024, the major reform set for 6 April 2025 will replace the remittance basis of taxation with a more straightforward residence-based framework.  

New arrivals to the UK will benefit from a four-year grace period where they will not be taxed on their Foreign Income and Gains (FIG), provided they have not been in the UK for 10 years prior to their UK arrival. Those that arrived before 5 April 2025 will also benefit from this provided they have not been UK resident for four years yet. 

Previous users of the remittance basis will be able to benefit from the TRF. The TRF is a key transitional measure to help non-doms adjust to the upcoming overhaul of tax rules. The changes aim to balance the UK’s attractiveness as a global destination for talent and investment with a fairer, simplified tax system. 

Labour also announced that they would extend the TRF from two to three years, giving non-doms more time to adapt. It now includes offshore structures, which were previously excluded. The TRF charge for designating FIG will be set at 12% for tax years ending in 2026 and 2027, rising to 15% in 2028.  

The TRF offers non-doms the ability to designate amounts of FIG for tax purposes at the lower TRF rate, instead of paying the full rate of tax on funds when they are brought into the UK.  

This restructuring of the tax environment is a key part of the UK’s strategy to attract skilled professionals and international investors, while maintaining fairness in the tax system.  

Changes are on the horizon

At this point, we know that changes will be made through amendments to the Finance Bill, but that they will not change Labour’s overall approach to “to replacing the outdated non-dom tax regime”. 

Following the Autumn Budget, critics were quick to respond to the intended changes with concerns that replacing the non-dom status would encourage wealthy people to leave the UK.  

A recent report from Henley & Partners and New World Wealth stated that in 2024 over 10,000 millionaires left the UK – an increase of 157% from the previous year. It is thought that the changes announced at the Autumn Budget contributed to this.  

At the election, Labour said their plans would raise money, now they have been forced to admit their plans make the UK less attractive.  

But has the damage already been done? 

We are keeping an ear on the ground and will ensure to keep you up to date with the changes as they are announced.  

For further advice, contact a member of our International Tax team today.